Pork and Stimulus – Mixing Opposing Economic Realities

The Stimulus Bill now in the Senate bears some resemblance to the version passed by the House, except it has increased in taxpayer liability by approximately 65 Billion Dollars – they are still working on it. The bill, which has received weakening support from the American Public, is laden with extra “programs”, otherwise known as “pork”. The final version is expected to be passed today, however, this mixed bag of tax credits (loosely based), infrastructure spending and a hodgepodge of “special state projects”, is putting our grandchildren into debt. There is also some question as to the packages ability to create jobs – There will, no doubt, be jobs created on the federal level, but it is unclear if any jobs will trickle down to the private sector, which remains bogged down in a credit crunch. What to expect? Political fall-out for the party in power should the stimulus fail to work and work fast – regardless of how many times President Obama stresses that it will take years to recover, the reality of a 7.6% jobless rate with no end in sight is making those who are on the receiving end feel a little less confident. What else? No-one knows for sure – there are divergent studies from a variety of economists – it is not an exact science.

The President will speak to the nation this evening in his first press conference, slated for a 7:00 pm Eastern Time slot. in usual partisan style, the press, along with the President are pointing fingers at those pesky Republicans who are finally doing their jobs. The article here at the Austin Statesman is true to form. The problem that the press and the President face is not the Republican Party, rather their constituents who, in the past few weeks, have grown leery of adding billions of dollars to an already over-extended deficit. If, and only, if, the stimulus can be modeled in such a way as to remove all unnecessary programs, will the people fall into line, otherwise, those Republicans who are now supporting the stimulus in its present form will be subject to the same backlash as their Democrat counterparts.

Small Business Tax Incentive Cut from Stimulus Package – Obama bows to Democrats Objections

The $3,000 job creation tax credit to small businesses which had been included President-Elect, Obama’s stimulus package, has been cut due to objections by Democrat legislators. According to Business Week, the Small Business Tax Credit formulated to stimulate job creation, was an part of a larger plan that was “expected to include”: a longer period of time for small businesses to “carry back” losses, an incentive to invest in improvements, and the tax credit for job creation.

Although the loss of the tax credit is being touted as an addition to the stimulus package designed to gain Republican approval by most media - small business tax breaks were part and parcel of the Obama-Biden campaign platform, which included exemption from capital gains.

Congressional Democrats argued that the tax cut included in the stimulus package was “ripe for abuse and difficult to administer.” Apparently, Democrats believe that giving billions of dollars to cities and states for construction projects instead, will be much easier to keep tract of, let alone, be subject to any abuse. One only needs to look at how well the infamous “Big Dig” worked out, to understand what this stimulus package could end up costing the taxpayer.

Therefore, it boggles the mind that Democrats are concerned about giving a $3,000 tax cut to small businesses, while having no concerns at all regarding state and local governments and construction projects. One can be fairly certain that any other “tax cuts” proposed in the stimulus plan, or any other package proposed by the President Elect on the campaign trail or otherwise, will be treated in much the same way. Tax cuts, of any type, are anathema to most Democrats, who, also using similar language regarding the proposed “middle class tax cuts”. The question now remains, will history repeat itself and any proposed tax cuts become tax increases under the new administration?